Customers line up outside an Apple store in Sydney, Australia, on Sept. 21: Weekend sales figures of the iPhone 5, while technically record-breaking, don't reflect the fact that the phone was being sold in more countries than its predecessors were. Cameron Spencer/Getty Images

September 25, 2012

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Daily business briefing

Apple has announced that it sold 5 million iPhone 5 units over the weekend, crushing the previous record of 4 million set by the iPhone 4S in 2011. One would think Wall Street would embrace this news from the world's most valuable company, right? Think again. Investors aren't impressed by the sales figures, and Apple's shares have tumbled from their $700-plus price on Friday, bottoming out near $685 Monday. Why aren't investors sold on the well-received, record-breaking handset? Here, four theories:

1. Analysts expected much moreForecasters predicted bigger, better things for the iPhone 5. Apple analyst Gene Munster of Piper Jeffreys went on record with an estimate between 6 to 10 million, settling on a conservative 8 million after seeing long lines of eager fans on launch day. In fact, says Jay Yarow at Business Insider, "Munster called 6 million a 'worst case scenario.' So, this is worse than a worst case scenario." Wall Street is responding accordingly.

2. The pre-orders were misleadingOn Saturday, Apple announced that 2 million people had pre-ordered the iPhone 5, more than doubling pre-orders for the iPhone 4S. The encouraging early figures emboldened analysts to boost their predictions, except "obviously, the weekend sales didn't follow the same pattern as the pre-orders," says Yarow.

3. The iPhone 5 had more ground to coverSales of the iPhone 5 were only about one million units higher than opening weekend sales of the iPhone 4S, says Seth Flegerman at Mashable. But "when you normalize the number of countries in which the phones were available over opening weekend," says ASYMCO analyst Horace Dediu, the iPhone 5 sold at "roughly the same rate as the iPhone 4S." So even though it smashed the old record, the figures aren't nearly as impressive as they seem.

4. Apple's buggy Maps app raises bigger concerns The release of such a "flawed product" like Apple Maps with iOS 6 would have worried former Apple CEO Steve Jobs, says Dan Radovsky at Daily Finance. Not so, it seems, his successor Tim Cook. That has investors concerned. It was a "strategic gamble on the part of Apple, to knowingly foist a poor product onto its loyal customer base" just to rid its mobile products of Google's presence. And when consumers suffer, that's bad news all around.